The introduction of the Alternative Investment Fund Management Directive (AIFMD) has fuelled a 13% growth in assets under management (AuM) since 2010 to $3.7 trillion, according to a joint report from Oliver Wyman and the Association of the Luxembourg Fund Industry (ALFI).
The study also found a 10% increase in the number of alternative investment funds (AIFs) domiciled in Europe. Luxembourg, which is home to 60% of EU AIFs, saw the addition of 169 funds, up 13% between 2010 and 2013. Furthermore, the number of funds in Ireland grew by over half, mainly due to the increase in interest from hedge funds.
The AIFMD came into force in July 2013 and brought hedge funds, private equity funds and pensions funds under regulatory scrutiny.
“The introduction of the AIFMD increased the attractiveness of European onshore domiciles,” says, Marc Saluzzi, chairman of ALFI. “Whilst many were against it when it was first introduced because of the fear of high compliance costs and additional complexity, this piece of regulation has brought significant benefits, allowing EU domiciled managers to market authorized funds across the EU.”
However, non-EU managers are still uncertain over the rules and have taken a wait-and-see approach. For example, the Cayman Islands saw its AuM share from hedge funds grow from 55% to 60% during the three-year period, and Delaware (in the U.S.) remains the domicile of choice for the majority of real estate funds with a market share of 67%.
“After having attracted a high number of AIFM applications over the last 12 months, the challenge for us will be to attract more AIFs in Luxembourg,” adds Saluzzi.
“Cayman and Delaware are strong competitors but we believe our fund centre has what it takes to become the “alternative” product domicile for more and more fund managers and institutional investors.”
The study also said interest in alternative UCITS structures had more than doubled since 2009 on a global basis. Demand for transparency and regulation since the financial crisis has increased the attractiveness of UCITs structures, it found.
AIFMD Fuels Growth in Assets under Management, says Study
The introduction of the Alternative Investment Fund Management Directive (AIFMD) has fuelled a 13% growth in assets under management (AuM) since 2010 to $3.7 trillion, according to a joint report from Oliver Wyman and the Association of the Luxembourg Fund Industry (ALFI).